Property Right Acquisition and Path Dependence: Nineteenth-Century Land Policy and Modern Economic Outcomes

Abstract

Abstract In this paper we compare lands settled between 1862–1940 under the Homestead Act to lands that sold for cash during the same time. We combine recently digitised individual land patents with modern satellite data and find a negative effect of homesteading on modern land use that cannot be explained by land quality, title characteristics or unobserved differences in settlers. We test the hypothesis that early homestead settlement put homesteaders ‘in the way’ of future development, creating a path dependence in land use decisions for homesteads, despite the fact that their legal rights were identical to purchased lands.